SDT rejects solicitor's strike-off agreement

The Solicitors Disciplinary Tribunal has rejected the option of striking off a solicitor over links to suspect investment schemes – despite his agreeing to the penalty.

Robert Sedgwick, who represented himself, had agreed with the Solicitors Regulation Authority to be removed from the roll after admitting to involving himself and his firm in four schemes described as ‘dubious’.

But the tribunal said it had insufficient information to be satisfied it was appropriate and proportionate to strike off the former consultant of south-east firm Buss Murton.

The tribunal said the regulator had not alleged any dishonesty or that the schemes involved any fraud, and that Sedgwick, who had enjoyed a 44-year unblemished career, had these matters hanging over him for more than three years. The agreed outcome, it was noted, not did even set out in detail how the proposed sanction had been arrived at.

Sedgwick and the SRA were asked to re-submit their agreed outcome and came back with a proposal for a 12-month suspension. This sanction was agreed at a one-day hearing earlier this month, along with £18,000 costs.

The tribunal heard that the SRA started its investigation into Sedgwick and his firm in 2016 – two years after an initial complaint had been made by an investor in a scheme. Investments had been paid into the firm which then passed them on to clients purporting to be involved in a carbon emissions eco-projects scheme.

The SRA said it was well established that solicitors should not act as an ‘escrow agent’ for a third party and so should regard any third party requesting this service with extreme suspicion.

Warning notices had been issued by the SRA and Financial Services Authority, the latter specifically related to carbon credit trading where firms were using dubious, high-pressure sales tactics and targeting vulnerable customers.

Sedgwick admitted to provided an account service for four companies and taking part in transfers totalling more than £1m.

In mitigation, Sedgwick said he was not aware of any warning issued by the FSA as to the carbon credit scheme, and he did carry out research on clients which did not uncover anything suggesting they were dishonest or bogus. He sought approval of partners of the firm and asked those assisting in the work to carry out their own searches.

12 Readers' comments

Have your say

Only registered users can comment on this article.

So you are stating that it was 850 investors own fault for investing in a scheme that sounded too good to be true - I sincerely hope you are not a practising solicitor with such a brutal and immoral attitude. Investors were not to know it was a fraud.

The Ecohouse director has been barred from holding directorships for 9 years by the Insolvency Service for misrepresentation of the investment scheme, its supposed security and his inability to account for large sums transferred overseas (in contrast the SRA only fined him £10k and gave him a 1 year suspension).The solicitors operated in a conflict of interests and gave legitimacy to a fraudulent scheme and supposed legal protection (but neglected to provide a legal service or advise hundreds of clients that they should seek alternative legal advice). Ecohouse director was freelancing at the solicitor firm whilst acting as Ecohouse director, and his daughter was working as an escrow agent at the solicitor firm, apparently unaware that her father was Ecohouse director! You couldn't get a more incestuous arrangement. His daughter received no penalty for releasing £millions in escrow funds to her father. Ecohouse clients understandably believed the solicitor firm was protecting their funds, but their trust was betrayed because the solicitors were crooked and released funds from escrow without checking veracity of trigger documents and breached hundreds of escrow agreements. The solicitors were found to have breached multiple SRA principles at trial.

A client appoints a solicitor for legal protection (yes,even against fraudulent schemes). Had the solicitor firm fulfilled their obligations listed in escrow contracts, their clients would have been protected against the fraud; it's as simple as that.

The SRA don`t appear stupid when the SDT overrides them and bring a lesser penalty because it appears the SRA made every attempt to bring harsher penalties. In my opinion the whole purpose of the article is to make it appear that it is not the SRA's fault when inadequate penalties are brought as a consequence of the SRA failing to allege dishonesty in client fund misappropriation cases. In fact it is the SRA's fault because they have created a grey area around dishonesty in the knowledge that PII won't indemnify acts of dishonesty. The SRA dictate insurer's terms, so are wholly responsible for the shortfall in consumer protection when the SRA neglects to allege dishonesty in order to avoid claims from the SRACF, but PII cover is still declined.

Maybe you should look closer to home for blame - if an offer of investment return sounds too good to be true (and is in dodgy housing schemes in the Brazil Rainforest...!) then maybe you should not invest.

@Scep tic
I believe the SRA Chief Exec uses the Gazette as a political medium to make the SRA appear purposeful and ethical, despite not knowing the meaning of the word ethical.
The supposed deal the SRA made was probably just a bluff by the SRA to make them appear to be doing the decent thing by suggesting a strike-off - in reality the SRA had probably pre-arranged for the SDT to reject the strike-off. That way the SRA doesn't get bad press for inadequate penalties in cases where dishonesty has not been alleged, yet client funds have been misappropriated. Why misappropriation is not automatically classified as dishonesty by default is a nonsense - misappropriation is theft of client funds and theft is unquestionably dishonest. The SRA seems to be attempting to make dishonesty a grey area, so that it can be avoided more readily and so permit the SRA to evade SRACF compensation claims.

SDT clearly took the view that what is the point of the sra opening a file if it cannot run up costs of at least 10K to eke out a living for its Indians and Chiefs and thus gave it the opportunity to do so

@Ecohouse Victim - seems to be a bit harsh to blame the SRA when they had an agreement that the chap would be struck off. Given that the SDT didn't strike the chap off it's obvious that the SDT didn't think he was dishonest, alleged or not.

The SRA & SDT have learnt absolutely nothing from the Ecohouse fraud case which involved solicitors releasing funds from escrow without any due diligence and inflicting £33 Million in losses to their clients over the course of 2.5 years.

If an escrow facility is dubious why don't the SRA ban its use or properly regulate the facility? (there are no specific escrow related regulations)

Here we go again, the SRA failing to allege dishonesty when a client's funds have been misappropriated in order to avert claims against the SRACF.

What's the point of merely issuing warnings or bulletins on the SRA's website regarding 3rd parties requesting solicitors to act as escrow agents? - many solicitors don't read them and the solicitors complicit in the Ecohouse fraud certainly didn't, as confirmed at their hearing.

The SRA are up to their usual dirty tricks, cheating misconduct victims out of SRACF compensation by making lesser allegations of "Failure to account".

If a solicitor releases client funds from account without providing a legal service, that is misappropriation and should be regarded as dishonest. It breaches several SRA principles. The SRA failing to allege dishonesty compromises what justice can be brought and cheats misconduct victims out of compensation because insurers won't indemnify acts of dishonesty whether the SRA alleges it or not.

"....Investments had been paid into the firm which then passed them on to clients purporting to be involved in a carbon emissions eco-projects scheme. ..."

Which was I understand not illegal or unprofessional?

"....The SRA said it was well established that solicitors should not act as an ‘escrow agent’ for a third party and so should regard any third party requesting this service with extreme suspicion. ..."

Should not or can with adequate due diligence?

Is it me or does this just seem a bit of a lets assist poor consumer - complainant time because no-one else has?

You agree to be struck off to minimise costs against you, but the SDT decide to hold a full hearing anyway to decide whether indeed you should be struck off or not, incurring £18,000 costs in the process.

The Law Society of England and Wales

The Law Society represents solicitors in England and Wales. From negotiating with and lobbying the profession’s regulators, government and others, to offering training and advice, we’re here to help, protect and promote solicitors across England and Wales.